Could interest rates go below 1%?
Answers
475 points
spider348 answered 2 years ago …
Do you mean the Fed Funds overnight rate ? Yes. Speculated we will see 1% next week and it could go lower.
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731 points
thinker70 answered 2 years ago …
They did in Japan so why not here. The simple fact is that under a Central Banking Fiat money system "manipulation" is the flavour of the day and ANYTHING is possible. A TV host here in Canada (Michael Coren) recently made this statement on his show: "capitalism by its very nature is immoral" and I concurr.
When banks can take in deposits, which are a LIABILITY in that they are the property of the depositor,and withdrawable on demand and magically have them in effect become an asset as in "RESERVES" on the basis on which they can CREATE (effectively out of thin air) as much as 20 X their RESERVES in NEW MONEY and loan it out (create a debt) that does NOT create the interest to be paid on the loan, then we have the MOTHER of all PONZI schemes!
The main reason that the masses do not understand the massive deleveraging that has been happening in past months and will continue for a long time yet is simply that they have never been told HOW the banking system ACTUALLY works! They continue to believe the MYTH that banks loan out their depositors money but KEEP a small percentage as a RESERVE on the theory that not everyone will withdraw ALL their money at once. In actual fact the multiplier effect of this DEBT CREATION (to the bankers benefit) far exceeds a factor of 20 as a portion of one persons loan proceeds shows up as deposits in other accounts and the process repeats.
The simple truth as publicly expressed by a former Governor of the Bank of Canada (Graham Towers) is that "every bank loan is a NEW creation of money, and when it is paid back it ceases to exist." This FACT means that UNLESS there are an exponentially increasing number of NEW LOANS to replace the interest the bankers have withdrawn from the system (which they did not create in the first place) the economy experiences a lack of liquidity (such as we have just experienced) so the only way this PONZI SCHEME called the Federal Reserve Act can continue is with massive new injections of "phony money" through more debt creation! Is it any wonder that under such a system we have inflation (the figures for which are highly manipulated) AND a growing mountain of UNPAYABLE DEBT at all levels of government, federal, state, municipal, private and in many cases even corporate.
We are being programmed by the top bankers and the subservient media to "TRUST them" because thay are taking actions to "RESTORE LIQUIDITY" but how can any intelligent person have their CONFIDENCE in the system "RESTORED" in what is essentially a "CON" game from the get-go when the EVIDENCE tells us that those responsible have horribly ABUSED the system for their own benefit? Piling more debt on the taxpayer to inject ADDITIONAL paper "dollars" only DILUTES the value of all EXISTING dollara, a RECIPE for more inflation and only EXTENDS the time frame for a much needed correction and restoration of HONEST MONEY backed by hard assets.
Educating yourself about the Federal Reserve Act can only make you a better investor as the present scenario plays out over the coming months and years.
4107 points
MNSL answered 2 years ago …
I think sometimes Fed will reduce interest rate within next 18 months as other countries are reducing their interest rate gradually.
Reducing interest rate has become main trend in almost all the countries from Europe, Korea, Indian, and New Zealand to Australia. They will keep reducing interest rate at least for the next 02 years
As a result of this their value of currencies are falling now. Almost all types of assets are falling. Inflation also will come down gradually. In the medium to long term many countries will benefit and it will affect positively to the stock market. Funds will return from money market to stock market again.
In the short run inflation can go up due to interest rate cut in some countries. However falling commodity prices will help some countries to maintain favorable balance of payments from next year onwards together with lower inflation. These are positive signs for revival of stock market again.
In the future if Banks, Insurance giants, top investment banks do not manage their businesses in a social responsible way, I think almost all people will withdraw funds from their institutions They could bring total collapse in the financial system. Therefore they should implement prudent polices in lending. They must not try play with other people money.
In the meantime regulators should implement some sort of monitoring systems to prevent market mess like today. There should be some sort of control in sophisticated financial instruments in the market. They should bring faith, confidence, and transparency not only to the market but also to the capital system again sooner than later. I do not think these some giants, analysts can fool people again.
